Insurance Industry: Part 1
Apart from Insurance, there are other industries that invest on Artificial Intelligence and Machine Learning technology. These industries include Consumer Packaged Goods, High Technology, Travel, and Transport. Investments on AI/ML by insurance companies has gone up five times higher compared to the investments in 2000. Some specific examples where AI/ML is being applied by insurance companies are: Fukoku Mutual Life Insurance which uses artificial intelligence for claim processing and settlement and Chola Ms which applies Machine Learning to speed up the process of settling claims and also prevent cases of insurance fraud. Below is a deep dive into the clarifications of the original response.
"INVESTMENTS IN AI/ML AND RELATED TECHNOLOGIES HAVE INCREASED MORE THAN FIVE-FOLD"
This means that artificial intelligence and automation technologies such as robotic processing automation are highly demanded by the insurance sector. According to a Stanford University study, investment by the insurance sector on artificial intelligence has increased more than five-fold today compared to 2000. This means that now insurance companies have started investing five times more on artificial intelligence based technology as compared to 2000.
WHAT OTHER INDUSTRIES ARE INVESTING ON AI/ML APART FROM INSURANCE
The 2017 Global Trends study revealed that the insurance industry invests an average of $124 million per company in AI. This means that the insurance industry alone invests $54 million more than the average across all other industries. According to the TCS' Global Trend Study on Artificial Intelligence, which studied how 13 different industries are spending on artificial intelligence, the average spending for the other 12 industries was $70 million. The top 3 industries in terms of investment on AI were insurance, consumer packaged goods and high technology sector. According to the study, the other industries that invested on AI/ML are Consumer Packaged Goods, High Technology, Travel, Transport and Hospitality, Automotive, Banking, Energy, Healthcare, Industrial Manufacturing, Media, Retail, Telecommunications, and Utilities.
SPECIFIC EXAMPLES ON MI/AL APPLICATION IN INSURANCE COMPANIES
According to Insurance Innovation Reporter, Machine learning is critical in insurance because it enables insurers to "take observations and findings from claims audits" which are later used in investigating, evaluating, and settling claims. ML helps insurers to reduce the leakage of claims and also prevents over payment. The following are examples of insurance companies using artificial intelligent and machine learning:
FUKOKU MUTUAL LIFE INSURANCE
This Japanese insurance company applies Artificial Intelligence for its claim processing and settlement. With a "cognitive AI technology that replicates human thinking", the company can analyze and interpret their data. The technology was used to process claims, underwriting, and detecting fraud.
This insurance company uses Machine Learning algorithms so that they can tap into unstructured and semi-structured data (claims notes and documents) as well as structured data to identify potential fraud. The company has used this technology for its claims survey process. Machine Learning has helped them to settle claims faster, increase the productivity of surveyors, and prevent fraud.
What does it mean to utilize phone apps and automotive systems?
P&C carriers means Property and Casualty Insurance companies. These companies are using phone applications and automotive systems that automate relevant information to help them close claims instantly after they occur. This is explained in detail with the help of an example mentioned below.
Suppose an accident occurred in a remote area. There is a sensor along with the dashboard camera already attached in the insured car that met an accident. Due to this, the insurer is automatically alerted about the accident. Since the insurer is already aware of the accident in real-time an insurance personnel can instantly begin to assist the driver and passengers.
Thus, they can assess the scope of the damages via the dashboard camera and information from the driver’s mobile. Moreover, the insurer can also dispatch a drone to take aerial photographs of the accident, the landscape and the weather conditions. Thus, the applications and technologies are used by the insurer to get crucial information in real-time for automating and claims can be closed shortly after accidents.
other examples where adopting future technologies has enabled a reduction in home insurance premiums
Nest has partnered with the American insurance company, American Family Inc. Nest offers Nest Protect smoke detector that offers a monthly discount for homes that link their Nest smoke detectors to the insurance firm. American Family is the first insurer which was running the program in the state of Minnesota. The insurer sends the customer the Protect (which costs $99) at no cost, and the customer hooks the Protect up via the ‘Works with Nest’ program. That will enable Nest to share some data with the insurance firm so it knows if the customer’s house has working smoke detectors. If a customer installs these products, they receive a discount of up to 5% on their insurance premiums.
This is a sensor that is used to detect and turn off the water supply before the slow escape of water accumulates over time. The digital sensor provide real-time proactive alerts around home. Water flow in the home can be monitored continuously by connecting a sensor to the water pipes. As a result, a customer and Insurer are alerted in case of a leakage to take proactive action. Given that one third of all household insurance claims are linked to water leaks, this is a "big incentive for insurers to act." Thus, insurance companies are likely to charge lesser premiums from customers.